(Bloomberg) — European stocks were subdued on Friday, weighed down by a broad retreat across banking shares and disappointing sales growth at L’Oreal SA.
The Stoxx Europe 600 Index was down 0.1% by the close, still posting a third straight weekly advance.
L’Oreal dropped 4.9% after the French beauty giant revealed sales were much weaker than expected in the region including China. HSBC Holdings Plc slipped 2.2% and UniCredit SpA declined 3.8%, making banks the worst performing sector.
Benchmarks in Hungary, Poland and Greece underperformed after beating emerging-market peers over the past 12 months. Meanwhile, technology and personal care stocks were among the sectors outperforming the broader index, with shares in Capgemini SE rising 5.1% as Chief Executive Officer Aiman Ezzat said the French IT company was “clearly pivoting” to facilitate AI adoption.
“The air is getting thinner for European equities after the strong performance year-to-date,” said Wolf von Rotberg, equity strategist at Bank J Safra Sarasin. “Financials in particular would require a positive catalyst in order to extend the gains they have seen over recent months. Yet bond markets tell a different story, as they start pricing a moderate growth backdrop.”
European stocks had scaled records as recently as this week amid resilience around economic growth. However, worries about disruption from artificial intelligence have roiled sectors ranging from software to wealth management and even transportation.
Focus is also on the earnings season. Analysts have downgraded European profit estimates this year, according to a Citigroup Inc. index.
“The uncertainty will remain high in the near term,” said Ulrich Urbahn, head of multi-asset strategy and research at Berenberg. “But we believe that equities will rebound from here with solid earnings, policy support and stronger buyback activity going forward.”
In other individual stocks, Safran SA rallied 8.3% after the French aerospace company upgraded its 2028 earnings targets. Shares in London-based gambling company Flutter Entertainment Plc sank 11% after DraftKings, a subsidiary of Flutter Entertainment in the US, issued a disappointing outlook on Thursday.
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–With assistance from Sagarika Jaisinghani and Michael Msika.
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